Soaring deficits, reduced income, over-burdened infrastructure, over-burdened health-care system, mountains of unfunded pension liabilities, a politically-correct atmosphere of entitlement (even among non-citizens), and a populace that wants no new taxes. All of these things define both the Federal Government of the United States and the State of California. There is one crucial difference, however, which assigns the image of green shoots to the former and tumbleweeds to the other. California doesn’t print its own money. Therefore, the state can only spend money it either has or borrows, and no one is stupid enough to lend them anything anymore. Absent this crucial difference, California is a microcosm of the USA. Unfortunately, this difference is unimportant in the long run for the Federal Government, because inflating the currency is not a solution; it’s a delay tactic.
So, what can be done for California? Well, cuts need to happen, taxes need to be raised, money needs to be borrowed (courtesy of the Federal Government guaranteeing the debt, like a parent co-signing on their delinquent teenager’s car loan), or the State needs a Federal bailout. In my opinion, each of the four options is equally likely, and probably a combination of all four will be the solution.
The cuts needed are mind-boggling, such as eliminating welfare, college funding, and state-funded medical insurance entirely. And closing state parks. And letting people out of prison early. And even eliminating textbooks. Some people are very, very upset. But hey, the populace just shot down an emergency increase in taxes, so what’s the state to do?
Obviously, politically pander and beg for handouts from the Federal Government, of course. With all the chains and conditions such funding will inevitably come with. In the meantime, as an angry citizen as you most surely are, you can play with the budget yourself and see how you’d plug the gap with this interactive tool. It’s educational at the very least. Who’d have thought money didn’t just fall out of the sky over Sacramento?
Almost certainly, some amount of money will get passed down from the Obama administration. But keep in mind this fact: the Federal Government is in far worse shape than California. In fact, if California’s debt to GDP ratio was the same as the Federal Government’s, its debt would be 230 billion instead of 25 billion!
Today’s article of doom: Idiotic mainstream media tries to link Nazi shooter with people who oppose the Federal Reserve, fiat money (rather than the Gold Standard), and unconstitutional Income Taxes by claiming the United States never existed without them.